Larry Catá Backer's comments on current issues in transnational law and policy. These essays focus on the constitution of regulatory communities (political, economic, and religious) as they manage their constituencies and the conflicts between them. The context is globalization. This is an academic field-free zone: expect to travel "without documents" through the sometimes strongly guarded boundaries of international relations, constitutional, international, comparative, and corporate law.

Thursday, September 30, 2010

Kevin Brown has recently provided a window on the substantive governance effects of reporting in a recent posting to colleagues (reproduced with permission):.

Are you aware of the new federal Department of Education guidelines for the classification of race and ethnicity (Guidance) that went into effect for this fall's incoming class of law students? These regulations apply to all educational institutions, including law schools. In addition, the ABA Questionnaire Committee has also changed the requirements on race and ethnicity for law schools to comply with the Guidance. At the 20th Critical Race Theory Symposium, I mentioned this during one of the preliminary sessions because the Guidance is a game changer for everyone working with issues of race and ethnicity. I also talked about this at the AALS Post Racial workshop this past June in New York.

Historically, law schools lumped all blacks into a unified Black/African/African-American category. Law schools counted anyone who indicated that they were black in their counts of blacks. What the new regulations require is that when educational institutions seek to gather data on race and ethnicity, they must first ask "Are you Hispanic/Latino?" Then they must allow a respondent to mark one or more of five racial categories, (1) American Indian or Alaska Native; (2) Asian American; (3) Black or African American; (4) Native Hawaiian or Other Pacific Islander; and (5) White.

For purposes of reporting the race and ethnicity of their students to the DOE (and to the ABA), law schools must count anyone who answers "yes" to the Hispanic/Latino question in their count of Hispanic/Latino, regardless of which and how many racial categories they check. For non-Hispanic/Latino respondents who select more than one of the race categories, law schools must report all of them in a new "Two or More Races" category. Thus, law schools must report a person who answers "yes" to the Hispanic/Latino question and also checks the black racial box (Black Hispanic) in their counts of Hispanic/Latinos. In addition, law schools must report a non-Hispanic/Latino person who checks the black racial box and at least one other, say White or Asian or both (Black Multiracials) in a new Two or More Races category, along with other multiracials. In other words, as of now, law schools report Black Hispanics as Hispanic/Latino and Black Multiracials as Two or More Races.

The impact of the Guidance will have tremendous implications for both how many black students there are and the racial ancestry of those black students. Effectively, law schools can no longer count Black Hispanics and Black Multiracials as black. I should also note that Black Multiracials and, to a far lesser extent, Black Hispanics are placed in a precarious position by the Guidance that could significantly reduce their chances of admissions to selective higher education institutions as the impact of the Guidance unfolds. When admissions officials at selective higher education institutions consider racial classifications in their admissions process, they base those decisions on a holistic evaluation of a given applicant.Nevertheless, no doubt many admissions officials-at least in their minds-compare the standardized tests scores and grade point averages of a particular applicant from a given racial/ethnic group to other applicant’s of the same racial/ethnic group.The average LSAT scores for African Americans who took the test during the 2007-08 academic year was 142.2, for Hispanics 146.3, for Mexican Americans 148, for Native Americans 148.6, for Asian Americans 152 and for Caucasians 152.6. Thus, changing the comparative group on the SAT for Black Multiracials, from Black/African American to applicants in the Two or More Race category would move the average SAT score of their comparison group from 142.2 to a group that includes White/Asian multiracials that could have average LSAT scores 10 points higher!

This is soft governance, a governance of managed consequences rather than of command. It is a governance grounded in control of the body--defining its character and classification and through that organization of data, appear to be passive in the consequences that flow therefrom. It is a governance that manufactures acts which may then be fed through ostensibly neutral managerial systems by which the state may manage power relationship among peoples, and order the distribution of public goods, without appearing to do either. Or better put, this sort of governance through information permits the state to assume a passivity (the state can maintain that its actions are driven by the "facts" revealed in information harvesting whose character cannot be controlled) while actively setting up the parameters of the system to produce facts of a desired character to achieve managerial goals. Substantive outcomes can be discussed in the more neutral language of designing "appropriate" information harvesting systems that in turn will serve as the source of "facts" for the application of policy and the division of power. As a consequence, existence is reduced to an issue of bureaucratic system design. Professor Brown suggests the nature of those discussions

The new reporting requirements will allow higher education programs to collect data on self-identified Black Hispanics and self-identified Black Multiracials. However, the Guidance does not mandate the collection or reporting of data regarding the ethnicity of Blacks. This is not surprising since the Department of Education promulgated the Guidance out of a concern for the growing multiracial population in the United States, not the changing ethnic ancestry of Blacks in the United States. Some commentators on the Guidance urged the addition of other racial/ethnic reporting categories, including Middle Eastern, Southeast Asian and African (as different from African American), Indian/Pakistani (as a different category from Asian), Filipino and Cape Verdean (as different from African American), but the Department of Education rejected these additions. The discussion about this topic in the Guidance noted that these categories were rejected during the discussions that lead to the 1997 OMB Standards. From the comments discussing the adoption of the 1997 OMB Standards, there does not appear to have been much additional discussion about separating Africans from African Americans or West Indians from African Americans. (Kevin Brown, "Now is the Appropriate Time, supra, at 316).

The benefits of this system of control through indirect management rather than through the command of "law" in statutes rules or practices, is too tempting to resist. Regulation through information harvesting provides a vehicle for avoiding direct responsibility for the policy and behavior consequences of governmental action. After all--what is more innocuous than the collection of information. It also maintains a separation between legislature and the actual mechanics of collection and definition. Reduced to characterization as a mere mechanical or technical task, the most consequential aspects of political decisions can be avoided by those who are politically responsible. The legal characterization of race and ethnicity, and the determination of which are counted and which are ignored, has tremendous political and regulatory consequences in an environment in which individual and institutional actions are triggered by or through this counting exercise. While the legislature remains an important site for political action and the production of law for instrumental purposes, any battle won at the legislative level can be effectively undone where governance really occurs, within the interstices of the regulatory state that has been erected to manage its subject populations and by technical regulations that hide political choices made without direct legislative accountability.

For years now the writing has been on the wall. Over the last decade two great factions within the Cuban governing elite have been debating the future course of Cuban economic development. On the one side stood the governing apparatus of traditionalists tied to the old Soviet model of development. This group assumed there was no flaw in the Soviet model and they were determined to show that they could succeed where the Soviet sphere failed. On the other stood progressives, with significant elements in the Fuerzas Armadas Revolucionarias, that increasingly looked to East Asian models of development as a means of preserving the political system while modifying the economic system to preserve political stability and the legitimacy of the leadership role of the Party. See Larry Catá Backer, On the Anniversary of the Attack on the Moncada Barracks: Cuba Moves Forward towards its Chinese Future, Law at the End of the Day, July 27, 2007. One side was supported by Fidel Castro. The other side was supported by Raúl Castro.

The interview, of course, was meant to confuse the West, whose analysts would predictably misread the meaning and effect of the "admission." "Fidel Castro's nine-word confession, dropped into conversation with a visiting US journalist and policy analyst, undercuts half a century of thundering revolutionary certitude about Cuban socialism." Rory Carroll, Fidel Castro says his economic system is failing, supra. Westerners and the enemies of the regime tended to over-read the statement--finding it too difficult to resist the urge to read into the statement their own hopes, desires and long term perspectives.

"He is either crazy or senile. This certainly does not sound like something Castro would say," said Jaime Suchlicki, a long-time Castro observer and head of the University of Miami's Research Institute for Cuban Studies. "But if he was quoted accurately, then I guess he's come to the realization, like everyone else, that Marxist-Leninist governments do not function. So the real question is, what is he going to do about it now? Is he going to bring about change in Cuba since the Cuba model doesn't work?" Jim Wyss and Liusa Yanez, Fidel Castro says Cuba's economy is broken, McClatchy, Sept. 9, 2010.

Yet the evidence of its effect within Cuban conversations about the future of economic organization was not hidden. "Raúl Castro has been saying the same thing in public and private since succeeding his older brother two years ago." Rory Carroll, Fidel Castro says his economic system is failing, supra.

The remark should not, however, be interpreted as a condemnation of socialism, added Wilkinson. "That is clearly not what he means, but it is an acknowledgement that the way in which the Cuban system is organised has to change. It is an implicit indication also that he has abdicated governing entirely to Raúl, who has argued this position for some time. We can now expect a lot more changes and perhaps more rapid changes as a consequence." Id.

And so it is important to ask, at this point, what the Cuban elite is permitting to be said about this change. For that purpose, a recent article in the Communist Party paper may be of help. Leticia Martínez Hernández, Mucho más que una alternativa, Granma, Sept. 24, 2010.

Martínez Hernñández starts with an indirect admission that it is Raúl and not Fidel who is now asserting the leadership role with respect to economic issues. Rather than refer to Fidel's observation, she starts with Raúl's address to the National Assembly at the start of August, a month before the carefully staged interview with Fidel, describing plans to reduce public employment. "El pasado primero de agosto el General de Ejército Raúl Castro Ruz anunció en la Asamblea Nacional la decisión de ampliar el ejercicio del trabajo por cuenta propia, y utilizarlo como una alternativa más de empleo para los trabajadores que queden disponibles luego del proceso de reducción de plantillas infladas que deberá asumir el país." Id. Raúl also indicated a substantial revision of the legal impediments to private economic activity, at least at the lowest levels of such activity. "En la reunión parlamentaria se conoció, además, que se eliminarían varias de las prohibiciones vigentes para el otorgamiento de nuevas licencias y la comercialización de algunos productos, además de flexibilizar la posibilidad de contratar fuerza de trabajo en determinadas actividades." Id. See also, Raúl Castro No Reform But Cuba Economy Control to Ease, BBC News Online, Aug. 2, 2010 ("Cuban President Raul Castro has ruled out large-scale market reforms to revive the communist island's struggling economy. But Mr Castro said the role of the state would be reduced in some areas, with more workers allowed to be self-employed or to set up small businesses." Id.).

This is no revolution, even judged by Chinese or Vietnamese standards. Rather, the focus is not on the aggregation of capital, or even of labor, for the production of goods or services. Rather, the focus of the changes are on the sole proprietor. Large scale economic activity remains the sole province of the state. The state has been careful to limit the sorts of occupations or economic activities to which liberalization applies. About 178 occupations are listed. "Admi Valhuerdi Cepero, viceministra primera del Ministerio de Trabajo y Seguridad Social, explicó que podrá realizarse el trabajo por cuenta propia en 178 actividades, de las cuales 83 podrán contratar fuerza de trabajo sin necesidad de que sean convivientes o familiares del titular." Leticia Martínez Hernández, Mucho más que una alternativa, Granma, Sept. 24, 2010. The state emphasizes the extent to which this listing liberalizes a number of activities traditionally beyond the reach of the individual. Valhuerdi Cepero is quoted as saying, "'Se concederán nuevas autorizaciones en 29 actividades que, si bien se ejercen en la actualidad, no se otorgaban nuevas autorizaciones desde hacía varios años'." Id. However, a careful reading suggests a focus on the lowest level of economic activity--that is on activity with respect to which aggregation of labor or capital is not required.

Beyond these activities, and certainly with respect to activities that might be undertaken jointly with foreign capital--the state retains a monopoly. And within the state, it is the military that serves as the most potent corporate entrepreneur. Larry Catá Backer, Empresas en Perfeccionamiento and the Sinification of the Cuban Economy, Law at the End of the Day, Aug. 30, 2007. Moreover, nothing in the new changes modifies the state based internationalism of Cuban commercial activities undertaken through ALBA. See, e.g., Larry Catá Backer, Globalization and the Socialist Multinational: Cuba and ALBA’s Grannacional Projects at the Intersection of Business and Human Rights (August 1, 2010). There is good reason for this within traditional Cuban Marxist Leninism. Unlike the Chines who overcame this fundamental problem of socialist economies in the victory of Deng Xiaoping in 1979, the Cubans continue to view juridical persons other than the state, or state controlled entities, as a fundamental threat to the Party as the sole representative of the people.

The small local sole entrepreneur, then, is the model that is to be cultivated at the heart fo the reformation of the political economy of Cuba. One can view this either as bottom up development or as the necessary bifurcation of the economy, with a market based local sector and a state sector for everything else.

Internal documents also suggest that a limited amount of aggregation will be permitted--cooperatives of individuals but not corporations. "The document obtained by AP - which is dated Aug. 24 and laid out like a PowerPoint presentation with bullet points and large headlines - said many laid-off workers will be urged to form private cooperatives. Others will be pushed into jobs at foreign-run companies and joint ventures. Still more will need to set up small business - particularly in the areas of transportation, food and house rental. . . . But it warned that many of the fledgling businesses won't get off the ground because laid-off workers often lack the experience, skill or initiative to make it on their own." Paul Haven and Andrea Rodriguez, Document charts Cuba's path to economic reform, Miami Herald, Sept. 14, 2010.

It clearly emerges that the principal objectives of the state are to convert workers from cost items to revenue generators. The hope is that as a result people will have a larger assortment of goods and services available and the state will not be burdened with the subsidies necessary to provide these items. Work flexibility is taken to redesign the political economy of the Island to increase individual productivity and efficiency as well as to provide a means through which workers can feel more useful, change popular conceptions of work, and to reduce its stigma. And the revenue generated is not merely available to the producers but also to the state in the form of taxes. "El primero de agosto se hacía pública también la aprobación de un régimen tributario para el trabajo por cuenta propia que responde al nuevo escenario económico del país. Que aporte más quien más reciba es el principio del nuevo régimen tributario que ayudará a incrementar las fuentes de ingresos al presupuesto del Estado, y a lograr una adecuada redistribución de estos a escala social." Leticia Martínez Hernández, Mucho más que una alternativa, Granma, Sept. 24, 2010. This income is meant to fund state activity in ways unavailable today. And so these private operators fo commercial actvity will be taxed if they mean to enjoy all of the social benefits provided byt he state.

In addition to strict controls on the sorts of occupations subject to liberalization, the State will tightly control the economic activities with respect to which private markets will be permitted. "Alhuerdi explicó igualmente que el otorgamiento de nuevas autorizaciones para el ejercicio del trabajo por cuenta propia se mantiene limitado por ahora en nueve actividades, porque no existe un mercado lícito para adquirir la materia prima, aunque se estudian alternativas que lo viabilicen." Id. Markets control is indirect--it is focused not on the markets for activities permitted, but rather focuses on markets for materials necessary to conduct business in a wide variety of activities that might otherwise have been permitted. Access to these markets will be carefully controlled and changes made slowly over the course of 2011 and beyond.

These changes are not treated so much as a deviation from prior practice as a return to the practices of the early post revolutionary period. The fig leaf for this opening of economic activity are the regulations that grandfathered professionals in the practice of their profession entered into before 1964.

There is an additional benefit--the conversion of illegal into legal activities and the consequent reduction in the need for State Security to enforce laws that were increasingly ignored. Id. This is especially the case with respect to markets in real estate. "Entonces, se autoriza el arrendamiento a las personas que tienen autorización para residir en el extranjero (PRE) o a aquellos que, viviendo en Cuba, salgan del país por más de tres meses. Igualmente, y para apoyar el trabajo por cuenta propia, se concede la posibilidad de alquilar viviendas, habitaciones y espacios para su ejercicio." Id. With appropriate licenses from the State (the costs of which will likely be seen both as an impediment to an exuberant market and as a source of revenue to the state--and sadly possibly also a source of graft for front line officials) a limited market in rentals will be tolerated, available for the most part to those who receive permission to leave the country for a minimum amount of time.

A careful review, then suggests that the great changes to the Cuban political economy assumes a coherent shape that is hardly revolutionary or that otherwise points to a rejection of its current framework. This is change at the margins, even if understood as significant within the framework of Cuban political thinking. As such, control remains the key, and the avoidance of the creaiton of potential challengers to state-Party power critical. The State controls private economic activity in three ways: First it does not permit aggregations of economic power by individuals. Second, the State limits the occupations with respect to which private activity is permitted. And third, the state tightly controls markets open to private activity however it is described. The great opening, so emotively received in the West, in actuality provides a very tightly regulated set of activities within sectors that would not compete with the state for financial power, or otherwise threaten to open society to the possibility of aggregations of private individuals other than through the Communist Party or state approved (and controlled) organs.

Martínez Hernández ends with an explicit reminder of the framework within which these changes are made--one in which a small non state sector is tolerated at the level of individual basic needs, but which does not otherwise affect the power of the state to command rthe economy at the macro level and in its dealings with global actors. "Como dijera el General de Ejército en el Tercer Periodo Ordinario de Sesiones de la VII Legislatura del Parlamento, el primero de agosto de 2009, el fin es defender, mantener y continuar perfeccionando el socialismo, no destruirlo. Por esos caminos sigue desandando nuestra Cuba." Id.

For all that, it is not clear that those who continue to defend the traditional control economy model have given up. The newspapers in Miami reinforce this point:

An internal Communist Party document envisions a radically revamped Cuban economy, with a new tax code, freshly legalized private cooperatives and a state payroll no longer shackled by the need to support at least a half-million idle or unproductive workers.
The document - obtained Tuesday by The Associated Press - also offers a cold dose of reality for those who think reforming one of the last bastions of Soviet-style communism will be easy: It warns that many of the new businesses will be shuttered within a year.

Paul Haven and Andrea Rodriguez, Document charts Cuba's path to economic reform, Miami Herald, Sept. 14, 2010. The real danger for Cuba is that these reforms, like the lukewarm reforms of the 1990s--which also followed the familiar pattern of opening at the bottom to a limited number of individual entrepreneurs--will not produce the self sustaining local economic market oriented enterprises at the core of Chinese-style progress. For an excellent analysis of the failures of the 1990s reforms, see Roger R. Betancourt, "Cuba's Economic 'Reforms': Waiting for Fidel on the Eve of the Twenty-First Century," IX ASCE Proceedings 278 (1999).

This outcome is not an accident, but the result of a conscious attempt by the Cuban leadership to maintain absolute political control. It seems to have two basic policies in the economic realm. One is adopting economic mechanisms that yield control of foreign exchange for the leadership, which allows them to buy the support of the elite that makes up its power base and throw some crumbs to the rest (in dissident circles the crumbs are known as la jabita, la merienda and la propina). The other one is rejecting mechanisms that provide permanent and independent access to wealth creation for anyone who is not a member of the nomenklatura, and even to some who think they are members. Id., at 280-81.

And, indeed, the fear of operation in corporate form, in aggregations of people and capital that appear autonomous of the state (something permitted in China) may do more to reduce the success of this opening than any machination of Cuba's external enemies. Sometimes a mania for control may prove fatally counterproductive to the maintenance of that control The Chinese Communist Party understood this in 1978 (though it took a generation to produce results); it is not clear that the Cuban Communist Party is willing to open itself to that lesson.

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All essays are (c) Larry Catá Backer except where otherwise noted. All rights reserved. The essays may be cited and quoted with appropriate reference. Suggested reference as follows: Larry Catá Backer, [Essay Title], Law at the End of the Day, ([Essay Posting Date]) available at [http address].

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Globalization Law and Policy Series from Ashgate Publishing

Globalization: Law and Policy will include an integrated bodyof scholarship that critically addresses key issues and theoretical debates in comparative and transnational law. Volumes in the series will focus on the consequential effects of globalization, including emerging frameworks and processes for the internationalization, legal harmonization, juridification and democratization of law among increasingly connected political, economic, religious, cultural, ethnic and other functionally differentiated governance communities. This series is intended as a resource for scholars, students, policy makers and civil society actors, and will include a balance of theoretical and policy studies in single-authored volumes and collections of original essays.

An interview with the Series EditorQueries and book proposals may be directed to:Larry Catá BackerW. Richard and Mary Eshelman Faculty Scholarand Professor of Law, Professor of International AffairsPennsylvania State University239 Lewis Katz BuildingUniversity Park, PA 16802email: lcb911@gmail.com

About Me

I hope you enjoy these essays. Each treats aspects of the relationship between law, broadly understood, and human organization. My essays are about government and governance, based on the following assumptions: Humans organize themselves in all sorts of ways. We bind ourselves to organization by all sorts of instruments. Law has been deployed to elaborate differences between economic organizations (principally corporations, partnerships and other entities), political organization (the state, supra-national, international, and non-governmental organizations), religious, ethnic and family organization. I am not convinced that these separations, now sometimes blindly embraced, are particularly useful. This skepticism serves as the foundation of the essays here. My thanks to Arianna Backer for research assistance.